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Gavlik Construction Co. v. H. F. Campbell Co.

decided: October 31, 1975.

GAVLIK CONSTRUCTION COMPANY, A PENNSYLVANIA CORPORATION, APPELLANT IN NOS. 75-1446 AND NO. 75-2043
v.
H. F. CAMPBELL COMPANY, A MICHIGAN CORPORATION, APPELLANT, IN NOS. 75-1447 AND 75-2044 V. THE WICKES CORPORATION



APPEAL FROM AN ORDER OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA. (D.C. Civil Action No. 74-600)

Seitz, Chief Judge, Rosenn and Garth, Circuit Judges.

Author: Garth

Opinion OF THE COURT

GARTH, Circuit Judge:

This diversity case presents the questions of whether a subcontractor-contractor-owner dispute must be arbitrated, and, if so, whether the parties' agreements provide for three-party consolidated arbitration. We hold, as did the district court, that there has been no waiver of the contractual right to arbitrate and that legal proceedings were properly stayed pending arbitration. However, we further hold, unlike the district court, that the subcontractor and owner contracts provide for consolidated arbitration. We, therefore, affirm so much of the district court's order as stayed proceedings but vacate the remainder for the entry of an order compelling consolidated arbitration.

I. PROCEDURAL HISTORY

Plaintiff Gavlik Construction Co. (Gavlik) commenced an action on May 1, 1974 in the Pennsylvania Court of Common Pleas claiming that it had performed construction work for the defendant H. F. Campbell Co. (Campbell) under seven subcontracts but had not received full payment. On June 20, 1974 Campbell petitioned for removal of the Gavlik action to the United States District Court for the Western District of Pennsylvania under 28 U.S.C. § 1441 on the basis of 28 U.S.C. § 1332.*fn1 That same day Campbell moved for a stay of proceedings in the district court pending arbitration.

At the same time Campbell removed the Gavlik action another suit brought by Harry Dunn Company was then pending against Campbell in the United States District Court for the Western District of Pennsylvania.*fn2 On July 1, 1974 Campbell moved pursuant to Rule 42(a), Fed. R. Civ. P. to consolidate the Gavlik and Dunn actions.*fn3

Campbell filed a third-party complaint in the Gavlik action against The Wickes Corp. (Wickes) on July 2, 1974.*fn4 In the third-party complaint Campbell alleged that Wickes was liable to it for any amount that Campbell might be found liable to Gavlik plus a fee as provided in their contract. On July 3, 1974 Campbell moved for a stay of all proceedings with respect to the third-party defendant Wickes pending arbitration.

Gavlik moved to dismiss Campbell's motion for a stay of proceedings pending arbitration and to require Campbell to answer its complaint on July 16, 1974. Campbell, on November 18, 1974, amended its motions for stays pending arbitration in the Gavlik action by seeking an order compelling Gavlik, Campbell, and Wickes to submit to a consolidated arbitration. On December 5, 1974 Gavlik responded by moving to dismiss Campbell's amended motion for a stay of proceedings and a consolidated arbitration. Wickes did not contest Campbell's motion for a stay of the third-party complaint*fn5 or Campbell's amended motion for a consolidated arbitration.

The district court entered an order on September 2, 1975,*fn6 (1) granting a stay of proceedings pending arbitration between Gavlik and Campbell, (2) requiring Gavlik and Campbell to proceed forthwith with arbitration procedures, and (3) denying the request for consolidated arbitration. Both Gavlik and Campbell timely appealed from the district court's order. As later appears, (III, infra), we have jurisdiction pursuant to 28 U.S.C. §§ 1291, 1292 (a)(1).

II. FACTS

Owner Wickes entered into a contract on October 6, 1972 with general contractor Campbell for the construction of a sales and warehouse facility in Allegheny County, Pennsylvania. Under this agreement Campbell was to be paid for the cost of the work plus a contractor's fee. Article 18 of the Wickes contract provided that all disputes arising from the agreement would be decided by arbitration.*fn7 This contract also contained numerous provisions relating to subcontractors.

Pursuant to this general contract, Campbell entered into a series of written subcontract agreements with subcontractor Gavlik. Under these subcontracts Gavlik agreed to ". . . be bound to the Contractor by the terms and provisions of all of the Contract Documents,*fn8 . . ." and assumed toward the contractor all obligations which the contractor had to the owner. Gavlik subcontracts, art. 7. Furthermore, article 22 of the Gavlik subcontracts provided that "[any] disagreement arising out of this Agreement or any other Contract Document . . . shall be submitted to arbitration. . . ."

Gavlik commenced this suit to recover $53,798.85 allegedly owing under the subcontracts.

III. JURISDICTION

Gavlik seeks review of the district court's orders staying proceedings pending arbitration and requiring it to proceed to arbitration with Campbell. Campbell appeals from the order denying consolidated arbitration.

A. Stay of District Court Proceedings

Here, in an action to recover money damages, the district court has stayed proceedings pending arbitration. We have in similar circumstances held that such a stay constitutes the grant of an interlocutory injunction appealable under 28 U.S.C. § 1292(a)(1). In McCreary Tire & Rubber Co. v. CEAT, 501 F.2d 1032, 1034-35 (3d Cir. 1974), we said:

The order denying a stay pending arbitration is not a final order appealable under § 1291. But McCreary's complaint seeks recovery of money damages and no other relief. Since this suit would, prior to the merger of law and equity, have been an action at law, the motion for a stay pending arbitration is treated as a motion for an injunction against continuing the action at law. It is appealable pursuant to § 1292(a)(1) as an order denying an injunction.

See Enelow v. New York Life Insurance Co., 293 U.S. 379, 79 L. Ed. 440, 55 S. Ct. 310 (1935); Shanferoke Coal & Supply Corp. v. Westchester Service Corp., 293 U.S. 449, 79 L. Ed. 583, 55 S. Ct. 313 (1935); Kirschner v. West Co., 300 F.2d 133 (3d Cir. 1962).

To the extent that the district court ordered proceedings stayed under paragraph (1) of its order of September 2, 1975,*fn9 this Court has ...


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